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Could your bank get a mortgage?

By Dian Vujovich

In an effort to shore up the notion that a bank is  “too big to fail”— which is in and of itself a ridiculous concept that anyone with half a brain ought to  have a hard time believing—US regulators had adopted a new rule that will force America’s largest banks to have more assets in their coffers.


The new rule focuses on a bank’s supplementary leverage ratio. That’s a leverage ratio reflecting the amount of dept a company has on its balance sheet in relationship to its total assets. Currently that ratio is 3 percent but it’s been increased to 5 percent of equity at the bank holding company and 6  percent at their subsidiaries.


The change translates to an estimated hike of between $68 billion and $95 billion for our nation’s eight largest banks and include JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), Bank of New York (BK), and State Street (STT).


While that amount might seem astronomical to the average bank customer, according to a Fortune.com story published earlier this week, “$68 billion is roughly a quarter of what the big banks will earn by the time the rule goes into effect.” That would be by January 2018.


Making sure we don’t have to endure another financial crisis, caused in part by our biggest banks and the financial industry, is a very good thing. But thinking that a bank, or any person, company, group, institution etc. is too big to fail is both pretty flawed and stupid thinking.


But don’t believe me. In 1786, Robert Burns said it best when he wrote these insightful words in a poem titled, To a Mouse: “The best-laid schemes o’ mice an’ men
Gang aft agley, 
An’ lea’e us nought but grief an’ pain, 
For promis’d joy!”


A 3 percent jump isn’t much to ask given that banks aren’t the kinds of simple institutions they were once upon a time when their primary focus was taking in customer deposits and then  lending the monies out for things like car loans and mortgages. Today, however,  banks are financial institutions  rift with investment goals that focus more on their shareholders needs than the goals of  those their everyday depositors.


Which brings me to this blog’s headline. ‘Could your bank get a mortgage?”


If corporations are people, that makes a bank a person. Right? I don’t know too many people who could walk into their  bank today and qualify for a mortgage with only 5 percent down.

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